
A RRIF is a type of account that allows you to convert a portion of your Registered Retirement Savings Plan (RRSP) into a taxable income source.
You can set up a RRIF with your bank, credit union, or insurance company, and the funds are usually invested in a variety of investment options.
The minimum amount you can withdraw from a RRIF is 5% in the first year, increasing by 1% each year thereafter.
You can choose to withdraw the minimum amount or more, but you must withdraw at least the minimum amount each year.
What is a RRIF?
A RRIF is a federally registered account that provides a steady stream of income from your retirement savings, essentially a continuation of your RRSP.
It functions in much the same way as your RRSP, but you can only make withdrawals from a RRIF; you can’t make deposits.
The earnings in a RRIF are not taxed, but the RRIF payouts are considered part of the beneficiary's normal income and are taxed by the Canada Revenue Agency (CRA) in the year of the payout.
You can roll over the balance from your RRSP into a RRIF to fund a retirement income stream.
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Benefits and Advantages
Your RRIF can continue to grow tax-deferred, similar to an RRSP. This means you won't have to worry about taxes eating into your retirement savings.
You can change up the investments you hold at any time, with the expert advice of an advisor. This flexibility is especially helpful if your financial situation changes.
You can decide when and how much to withdraw from your RRIF as long as you take the required minimum amount. This gives you control over your retirement income.
Your RRIF assets can transfer to your spouse on a tax-free basis when you pass away. This can be a huge relief for your loved ones.
Here are some benefits of a RRIF at a glance:
- Your RRIF can continue to grow tax-deferred.
- You can change up the investments at any time.
- You can decide when and how much to withdraw.
- Your RRIF assets can transfer to your spouse on a tax-free basis.
How it Works
A RRIF is a tax-advantaged savings vehicle that allows you to hold eligible investment products. You can manage it in the same way you managed your RRSP, while paying yourself to support your retirement.
Investments within a RRIF can grow on a tax-deferred basis, which means you won't have to pay taxes on the gains until you withdraw the funds. This can be a big advantage, especially if you're planning to live off your investments in retirement.
You must convert your RRSP to a RRIF by the end of the year you turn 71, or sooner if you need the income. Your investments transfer directly and don't have to mature or be liquidated.
You'll start taking withdrawals the year after you open your RRIF, and you can choose any amount as long as you meet the minimum annual withdrawal set out by federal regulations. This minimum payment schedule is what you need to be aware of to avoid any penalties.
Here's a summary of the RRIF minimum payment schedule:
You'll report withdrawals as income on your tax returns, and RRIF funds are taxable in the year you withdraw them. This means you'll need to factor in taxes when planning your retirement income.
Investments and Accounts
When choosing an investment product for your RRIF account, you have several options to consider. TD Canada Trust offers a variety of products to suit different investment strategies.
If you're looking to minimize risk, the TD Canada Trust Flexi-RIF might be a good choice. This product is designed for investors who want to protect their principal.
For investors who are comfortable with some risk, TD Mutual Funds Retirement Income Options could be a better fit. This product offers a range of investment options to help you grow your retirement income.
If you want to have more control over your investment strategy, consider the RIF at TD Direct Investing. This product allows you to manage your portfolio and make investment decisions online.
Here are some key investment options to consider:
RRSP and RRIF
A RRSP is a great way to save for retirement, but what happens when you're ready to use those savings? A RRIF is like an extension of your RRSP, but instead of putting money in, you withdraw from it to use throughout retirement.
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You can convert your RRSP to a RRIF anytime before you turn 71, which is a good idea since you'll be forced to do so by then anyway. This way, you can start getting regular income from your savings instead of having to withdraw the entire amount and pay taxes on it.
Here are the key differences between RRSPs and RRIFs:
- RRSPs focus on contributing money, while RRIFs focus on withdrawals.
- RRSPs allow you to save for retirement and defer taxes, while RRIFs provide income during retirement and withdrawals are taxed.
RRSP vs RRIF
The difference between an RRSP and a RRIF is quite straightforward. RRSPs are meant for contributing money into your account regularly, whereas RRIFs only allow you to withdraw money from the account, with no contributions allowed.
One key distinction is that RRSPs focus on saving for retirement, deferring your taxes in the process. RRIFs, on the other hand, provide income during retirement through regular withdrawals of the savings from your RRSPs.
A RRSP is a Registered Retirement Savings Plan that lets you save money for retirement, and you can't make withdrawals until you convert it to a RRIF. Payments from a RRIF, however, are considered taxable income.
You can contribute to an RRSP regularly, which is great for building up your savings over time. In contrast, a RRIF only allows you to withdraw money from the account, making it more of an income source during retirement.
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Ready to Use RRSP Savings
Now that you're ready to use your RRSP savings, let's explore the next step. A Registered Retirement Income Fund (RRIF) is an extension of your Registered Retirement Savings Plan (RRSP), where you withdraw money instead of putting more in.
A RRIF is designed to provide a steady income stream in retirement, allowing you to access your RRSP savings as needed. This is a key benefit of a RRIF.
To understand how a RRIF works, it's essential to know that you'll need to convert your RRSP to a RRIF by December 31 of the year you turn 72. This is a rule you should be aware of.
Here are the benefits of a RRIF:
- Guaranteed income stream for life
- Flexibility to adjust your income to suit your needs
- Ability to withdraw a lump sum if needed
Fees and rules apply to RRIFs, so it's crucial to understand these before investing.
Withdrawal Rules and Calculator
To open a RRIF, you must withdraw the annual minimum payment (AMP) each year, with no maximum withdrawal limit.
You can review the RRIF minimum payment schedule to determine your AMP percentage based on your age.
The money in your RRIF is considered taxable income in the year you withdraw it.
You can use a RRIF calculator to estimate the minimum income withdrawal you could receive.
A RRIF calculator can help you plan your withdrawals and make informed decisions about your retirement income.
Fees and Functionality
Investments in a Registered Retirement Income Fund (RRIF) grow tax-deferred, just like in a Registered Retirement Savings Plan (RRSP). This means you won't pay taxes on the investment earnings until you withdraw them.
One key difference between a RRSP and a RRIF is that you can't make further contributions once you convert to a RRIF. This is a crucial thing to keep in mind when planning your retirement income.
The minimum RRIF withdrawal is a mandatory annual amount that's paid out of the fund and sent to you without withholding tax. This amount is taxable, but you may be eligible for a tax credit to reduce your federal income tax by 15% of the first $2,000 withdrawn if you're 65 or older.
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Fees
Fees can be a significant consideration when managing your RRIF. A $150.00 fee will apply if you wish to transfer your current RRIF to a company outside RBC (and its subsidiaries).
Some fees are unavoidable, but it's essential to understand what you're getting into. You'll need to pay a $150.00 fee if you want to transfer your RRIF to a different company.
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Functionality

In a RRIF, investments grow tax-deferred, similar to a RRSP. However, no further contributions can be made once conversion to a RRIF has occurred.
The minimum RRIF withdrawal is an annual obligatory amount that must be cashed out of the RRIF without withholding tax. This withdrawal is taxable Canadian income, but eligible for a tax credit to reduce federal income tax by 15% of the first $2,000 withdrawn for holders 65 years or older.
A minimum RRIF withdrawal is calculated by a percentage based on the account holder's age and the total value of the plan on January 1 each year. For example, if a RRIF is valued at $500,000 when the account holder is 72 at the start of the year, the minimum annual payout will be $37,400.
As the account holder's age increases, the minimum RRIF withdrawal percentage also increases. The holder of a RRIF may elect to withdraw an amount greater than the minimum RRIF amount for that year, though withholding tax will apply to this supplementary amount.
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History and Options
The Registered Retirement Income Fund (RRIF) has a rich history that dates back to 1978, when it was announced as part of the Canadian federal budget by Jean Chrétien.
The RRIF was created to provide a steady income stream for retirees, and it has undergone several changes over the years to adapt to the needs of Canadians.
The first RRIF was implemented through an amendment to the Income Tax Act, which received royal assent on June 30, 1978.
In 2020, the federal government reduced the minimum withdrawal amounts by 25% as part of its response to the COVID-19 pandemic.
This reduction was implemented through the COVID-19 Emergency Response Act, which received royal assent on March 25, 2020.
The federal government also made changes to the minimum withdrawal factors in 2015, affecting the percentage of the RRIF value that must be withdrawn each year.
Here's a breakdown of the minimum withdrawal percentages for RRIF account holders based on their age:
Planning and Conversion
You can convert your RRSP to a RRIF anytime before you turn 71, but it's mandatory to do so by the end of the year you turn 71.
Converting your RRSP to a RRIF defers taxation on the entire amount, which is a big advantage. If you simply withdraw the funds from your RRSP, the entire amount is fully taxable as ordinary income.
The Canadian government registers RRIFs for tax purposes, but the organization or company that holds the RRIF is called the "carrier" of the plan. Carriers can be insurance companies, banks, or any kind of licensed financial intermediary.
You can make RRIF withdrawals on a schedule based on your retirement goals, which offers flexibility and control over your retirement income. This is a key benefit of a RRIF.
RRSPs must be converted to a form of retirement income by December 31 of the year you turn 71, so it's essential to plan ahead and make this conversion in a timely manner.
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Frequently Asked Questions
You can have multiple RRIFs, but experts recommend having just one for simplicity.
You can manage your own investments in a self-directed RRIF, but not all investments are eligible and there may be tax consequences.
Any cash or term deposits in a RRIF account at a CDIC member are protected up to $100,000.
Investments in a RRIF account with a CIPF member are covered up to $1 million.
If you don't name a beneficiary, the RRIF funds become part of your estate and will be taxed as income.
Naming a qualified beneficiary, like a spouse or dependent child, allows the value to be transferred to their RRSP, RRIF, or other registered account without taxes.
Naming a non-qualified beneficiary, like a sibling or adult child, means the estate must report the money as income for tax purposes.
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Frequently Asked Questions
What are the disadvantages of a RRIF?
Withdrawing too much from a RRIF can put you in a higher tax bracket and increase your tax bill, while also potentially reducing government benefits like Old Age Security (OAS). Carefully managing RRIF withdrawals is essential to avoid these disadvantages.
What is an income retirement fund?
A retirement income fund (RIF) is a diversified investment product that helps save for retirement through a mix of stocks and bonds. It's a conservative way to generate income in your golden years.
Sources
- https://www.investopedia.com/terms/r/rrif.asp
- https://www.td.com/ca/en/personal-banking/personal-investing/products/registered-plans/rif
- https://www.rbcroyalbank.com/investments/rrif.html
- https://en.wikipedia.org/wiki/Registered_retirement_income_fund
- https://www.nerdwallet.com/ca/investing/what-is-rrif
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